The European Commission approves aid for renewable energy in Denmark

The Commission's decisions of 17 August 2018 in cases SA.49918, SA.50715 and SA.50717

By attorney Sonny Gaarslev and assistant attorney Emma Marie Jespersen

Objective: renewable energy growth

It is a declared objective in Denmark that renewable energy consumption must grow to a larger share of the total energy consumption. The objective is that 30% of the energy consumption must come from renewable sources in 2020. This objective originates from the Renewable Energy Directive, which sets specific targets for the shares of energy from renewable sources at member state level.

In addition, Denmark has an objective that 50% of the energy consumption must come from renewable sources by 2030, and that Denmark must be completely independent of fossil fuels by 2050.

Aid schemes

In order to achieve the objectives, the Danish authorities will implement three aid schemes to be financed through the government budget. The aid for the three schemes will be granted over a 20-year period from the time of the connection to the grid.

The first aid scheme is a multi-technological tender scheme for onshore and offshore wind turbines and solar installations. The beneficiaries of the aid will be selected through two tenders organised in 2018 and 2019, with the different technologies competing with each other. The selected installations will offer their electricity on the market and receive support in the form of a premium on top of the market price. The total budget for this aid scheme is DKK 842 million.

The second scheme is an aid scheme for onshore wind power for test and demonstration projects outside the two national test centres for large wind turbines. The total budget for this aid scheme is DKK 200 million.

The third and last scheme is a transitional aid scheme for onshore wind power. The total budget for this aid scheme is DKK 40 million.

European Commission approval

The Commission assessed all three schemes under the EU state aid rules and the European Commission's 2014 Guidelines on State Aid for Environmental Protection and Energy. According to the latter, member states are on certain conditions allowed to support the production of electricity from renewable energy sources. Read more about the conditions.

On this basis, the Commission found that the three schemes will help Denmark boost the share of electricity produced from renewable energy sources and thereby encourage the development of onshore and offshore wind and solar technologies in line with the requirements of the Guidelines. 

The Commission also found that the schemes will not unduly distort competition in the Single Market and will result in limited costs for taxpayers.

The three aid schemes were therefore approved.